John Pletz On Technology

ContextMedia founders are investing in more startups

No one would blame Rishi Shah and Shradha Agarwal for putting their heads down and cranking on ContextMedia Inc.

Their eight-year-old company, which built a video network of doctors' offices and medical facilities to give pharmaceutical and other health care advertisers a way to reach potential patients, is growing fast. Chicago-based ContextMedia will hire its 100th employee sometime this year and is moving into nearly 33,000 square feet in the former IBM Building at 330 N. Wabash Ave. next month.

But Mr. Shah and Ms. Agarwal are pouring time and money into early-stage startups with their fund JumpStart Ventures. They've invested more than $3 million in 32 companies in the past two years. Brad Purdy and Jim Demas, two members of the ContextMedia management team, provide operational expertise.

Most of the investments have been small — between $15,000 and $100,000. Now they want to step up to more than $100,000, as they dial back the number of investments to a dozen or fewer new ones each year. They plan to invest $10 million in the next three to five years, and they're planning to bring some entrepreneurs into their new digs to incubate a few startups, said Mr. Shah.

"It's more of a personal investment vehicle than anything else," the 28-year-old entrepreneur told me. "We don't have (limited) partners or a particular mandate."

Shradha Agarwal

Given their backgrounds, it's no surprise that Mr. Shah and Ms. Agarwal are interested in health care technology, education and personalization of media.

In addition to startups such as WeDeliver, Packback, SwipeSense, BucketFeet, BrightTag, Spartz Media, Ifbyphone, Shiftgig and VLinks Media, Mr. Shah and Ms. Agarwal have invested in venture funds Avia, Firestarter Fund and Chicago Ventures. They've made investments in Chicago, New York and San Francisco.

With the cost of technology plummeting because of resources such as Amazon Web Services, which allows startups to rent computing power on demand instead of buying racks of servers, it's cheaper than ever to launch a startup. So Mr. Shah's relatively small checks can go a long way.

He remembers how hard it was to get funding for ContextMedia. "I couldn't raise money," he said. "I was 19 and trying to change health care. I didn't have a track record. (Venture capitalists) weren't interested."

Mr. Shah bootstrapped ContextMedia when he started it in 2006. It's been profitable from the start and he expects to do about $20 million in earnings before interest, taxes, depreciation and amortization this year, double last year's total. Mr. Shah said revenue also is doubling annually, though he declined to disclose the amount.

"We have a long-term commitment to the Chicago entrepreneurial ecosystem, and this is a way to put our money where our mouth is," he said. "We want to focus on community-building."